The clashes came at the start of a two-day general strike called by unions furious that the government's new austerity programme will slap taxes on minimum wage earners and other struggling Greeks. The measures come on top of other spending cuts and tax rises that have sent the Greek unemployment rate soaring to over 16%.

Hooded youths ripped up paving stones and set rubbish bins on fire in central Athens as police gave chase and fired tear gas and stun grenades. Earlier, about 20,000 people had marched peacefully in two separate demonstrations, while another 7,000 protested in the northern city of Thessaloniki without incident.

Everyone from doctors and ambulance drivers to casino workers and even actors at a state-funded theatre were joining the strike or holding work stoppages for several hours.

Hundreds of flights were cancelled or rescheduled as air traffic controllers walked off the job. Strikes by public transport workers tangled traffic across the capital, while other protesters blockaded the port of Piraeus.

"The situation that the workers are undergoing is tragic and we are near poverty levels," said Spyros Linardopoulos, a protester with the PAME union at the Piraeus blockade. "The government has declared war and to this war we will answer back with war."

The cuts and an additional implementation law must be passed so the European Union and the International Monetary Fund release the next instalment of Greece's bailout loan.

Without that, Greece faces the prospect of a default next month - a potentially disastrous event that could drag down European banks, hurt other financially troubled European countries and even shock the whole global financial system.

But even MPs from the governing Socialists have been upset over the latest measures demanded by international creditors, and Prime Minister George Papandreou has struggled to contain an internal party revolt. He reshuffled his cabinet earlier this month to try to ensure his party's support for this vote, but the Socialists still only have a five-seat majority in the 300-member parliament.

European officials have also been pressuring the main conservative opposition party to back the austerity bill.

But leader Antonis Samaras has refused, arguing that while he backs some austerity measures, the overall thinking behind the package is flawed.

Mr Papandreou's new finance minister, Evangelos Venizelos, said the government acknowledged the new cuts were "unfair" and that he hoped negotiations over a second bailout would be concluded by the end of the summer.

"These measures will take us from running budget deficits to achieving primary surpluses," he said. "It's a difficult but necessary step."

But many Greeks insist they should not be forced to pay for a crisis they believe the politicians are responsible for.

"We don't owe any money, it's the others who stole it," said 69-year-old demonstrator Antonis Vrahas. "We're resisting for a better society for the sake of our children and grandchildren."

Even with the new austerity measures, many investors still believe that Greece is heading for some sort of default because its overall debt burden is too great.

"In his statement the Commissioner wanted to clarify a few issues," said Mr Amadeu Altafaj. "It concerns the illusion that there are other plans in our desks this week to avoid an immediate default in the Greek economy.

"If Greece does everything to attain the objectives set a year ago (in the first bailout deal), then European solidarity will continue. If not, then of course everything changes."

He added: "Speculate all you like, but we in the Commission do not have a Plan B.

"It's a matter of political responsibility, and we respect the prerogative of the Greek Parliament.

"I'm not sure it would be so responsible to say that whatever way the Greek Parliament votes, we in the Commission have alternative plans."